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Last week’s spot resin markets were not immune to the economic uncertainty wrought by the COVID-19 pandemic. While there was a good flow of both buy and sell inquiries, processors were generally apprehensive to pull the trigger, and, ultimately, the completed volumes were less than average, reports the PlasticsExchange in its Market Update.

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Polyethylene (PE) and polypropylene (PP) prices remained steady to mostly $0.01/lb lower. Buyers have been pleased to see resin prices continue to ease, but there have been expectations for a sharper and quicker break. Although sectors of the plastics industry have been declared essential and resin production and processing facilities can remain open, some resin buyers have begun to temporarily shut down, including those that feed the automotive industry, which anticipates weaker demand in light of the severe economic downturn resulting from the pandemic. On a brighter note, given strong demand for groceries and food take-out and delivery, governments have loosened restrictions on single-use plastics, which are deemed to be safer for consumers. The export markets have been facing headwinds: The combination of a strengthening U.S. dollar and weaker crude oil costs has made international resin producers increasingly competitive with U.S. producers. Together, these two factors could crimp exports and weigh on Houston prices, according to the PlasticsExchange.

The spot PE market was actually pretty active despite all of the unknowns swirling around the world. Though transactions were generally difficult and negotiations fierce, the number of completed transactions at the PlasticsExchange trading desk approached the resin clearinghouse’s trailing 12-month weekly average. The impression that the country is completely shut down simply is not true, as there have been few instances of temporary plant closures in select regions of the country. Most states deem the plastics industry to be essential, given its importance in the medical and food industries as well as packaging for general supply chains.

Despite adequate volumes, demand was still off and PE prices are expected to slide over the coming months. Most spot prices lost a penny last week, except for low-density film and linear-low-density injection, which remain difficult to source. The March $0.04/lb price increase effort was suspended by producers; they will be challenged instead to stave off price-decrease pressures in the coming months. International resin requests continued to flow in but price expectations have dropped significantly, as global prices slide and producers in regional markets have become amazingly competitive as their costs decline due to sharply lower crude oil feeds, reports the PlasticsExchange.

Spot PP trading slowed as some non-essential businesses, responding to shelter-in-place instructions from local governments, reduced or temporarily ceased operations. The slower consumer-driven demand, coupled with tumbling oil prices, caused buyers to hold off purchases until the dust clears or, for some, lower prices are simply at hand. Regarding completed transactions, volume favored off-grade truckloads, co-polymer PP was the main mover, and buying was split between resellers and processors.

Despite the lack of demand, supply continued to be quite tight for most prime homo- and co-polymer PP grades. For the fourth straight week, PP prices fell $0.01/lb, bringing prices in line with March PGP, which also just settled $0.04/lb lower. Prime prices have shifted, but with the shorter supply, largely because of planned and unplanned turnaround/maintenance, they have held their ground better than off grade, which has seen a larger discount develop, said the PlasticsExchange. Contract prices could take another hit, as the market eyes upcoming April PGP costs, which are pointing toward another steep decline.

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